East Bay Drywall, LLC v. Department of Labor and Workforce DevelopmentAnnotate this Case
East Bay Drywall, LLC was a drywall installation business that hired on a per-job basis. Once a builder accepts East Bay’s bid for a particular project, East Bay contacts workers -- whom it alleged to be subcontractors -- to see who is available. Workers are free to accept or decline East Bay’s offer of employment, and some workers have left mid-installation if they found a better job. In this appeal, the issue this case presented for the New Jersey Supreme Court was whether those workers were properly classified as employees or independent contractors under the Unemployment Compensation Law, which set forth a test -- commonly referred to as the “ABC test” -- to determine whether an individual serves as an employee. On June 30, 2013, East Bay, a business registered as an employer up to that point, ceased reporting wages to the Department of Labor and Workforce Development. Consequently, an auditor for the Department conducted a status audit that reviewed the workers East Bay hired between 2013 and 2016 to determine whether they were independent contractors, as defined by the ABC test. The auditor ultimately found that approximately half of the alleged subcontractors working for East Bay between 2013 and 2016 -- four individuals and twelve business entities -- should have been classified as employees. The Department informed East Bay that it owed $42,120.79 in unpaid unemployment and temporary disability contributions. The Supreme Court was satisfied that all sixteen workers in question were properly classified as employees, but it remanded the case back to the Department for calculation of the appropriate back-owed contributions.